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1952 DIGILAW 11 (KER)

Manuel Nadar v. Varunel Nadar

1952-02-08

GANGADHARA MENON, GOVINDA PILLAI

body1952
Judgment :- 1. The attaching decree-holder is the appellant. The appeal raises the question of the competing claims of the attaching decree-holder and the assignee-decree-holder to execute the decree. The decree in the case was obtained by the foreman of a chitty on the basis of a chitty security bond for the arrears of subscriptions due from a prized subscriber. It is dated 9.5.1121. On 24.5.1121 the decree-holder and one Savarimuthu Nadar Devasayaham Nadar filed a joint execution application stating that the decree was assigned to the latter and praying that he may be permitted to execute the decree. For the money due to the appellant as a non-prized subscriber in the identical chitty he had obtained Ext. I decree against the foreman. In execution of that decree, the appellant attached the decree in this case. The order of attachment was received in the case on 15.10.1121 and it was given effect to. Savarimuthu Nadar Devasahayam Nadar died and his children as his legal representatives filed an execution application on 24.4.1124 praying that the assignment of the decree in favour of their father may be recognised and they may be permitted to execute the decree. The contended that the attachment is of no consequence as it was effected only after the assignment of the decree. The attaching decree-holder to whom notice was given resisted the execution application and pleaded that the assignment in question is voidable under S. 28 of the Chitties Act (Act III of 1094) as it was created fraudulently without consideration for the purpose of defeating and delaying the realisation of the chitty money due to him under Ext. I decree and that he is entitled to execute the decree in pursuance of the attachment and realise the amounts due to him. The execution court upheld the plea of the attaching decree-holder and dismissed the execution application of the respondents. In appeal the lower appellate Court reversed that order. The attaching decree-holder has therefore come in second appeal. 2. The courts below have concurrently found that the assignment relied on by the respondents was without consideration. The joint execution applications that evidences the assignment was filed in Court within 15 days of the date of the decree. In appeal the lower appellate Court reversed that order. The attaching decree-holder has therefore come in second appeal. 2. The courts below have concurrently found that the assignment relied on by the respondents was without consideration. The joint execution applications that evidences the assignment was filed in Court within 15 days of the date of the decree. Admittedly the decree that was assigned was one of the assets of the chitty and at the time of the assignment money in relation to the self same chitty was due to the appellant under Ext. I decree. S.36 of the Chitties Act provides: "Where there are debts due from the foreman of a chitty in relation thereto and also other debts due from such foreman the chitty assets shall be applied in the first instance for payment of the chitty debts due to the subscribers." Therefore even in cases where the foreman has debts other than the chitty debts, he is bound in law to apply the chitty assets in the first instance for payment of the debts due to the subscribers. The purpose behind this section is that the chitty assets should be available for payment to the prized and non-prized subscribers. But in this case what the foreman has done is to transfer the assets of the chitty to another without even any consideration therefor. S. 28 of the Chitties Act enacts: [1] "Any voluntary or involuntary transfer of the rights of a foreman to receive subscriptions from prized subscribers shall, if it defeats or delays a non-prized or unpaid prized subscriber, be voidable at the instance of such subscriber." [2] "When under Sub-s. [1] of this Section a transfer is disputed by a subscriber, the burden of proving that the transfer does not defeat or delay such subscriber is upon the transferee." The learned judge thinks that in order that a non-prized subscriber to whom money is due under the chitty transaction may avoid an alienation of the chitty assets by the foreman, under S. 28 of the Chitties Act, he must establish that the foreman was in insolvent circumstances at the time of the transfer. We are unable to read S. 28 of the Chitties Act in that way. The Section states that if the transfer defeats or delays a non-prized or unpaid prized subscriber, it shall be voidable at the instance of such subscriber. We are unable to read S. 28 of the Chitties Act in that way. The Section states that if the transfer defeats or delays a non-prized or unpaid prized subscriber, it shall be voidable at the instance of such subscriber. Therefore what the courts have to see in such cases is whether the transfer defeats or delays such a subscriber. If it does, then the subscriber has an unquestionable right under S. 28 of the Act to avoid the transfer. No doubt the insolvency of the foreman at the time of the transfer may be a circumstance in determining the question whether the transfer defeats or delays a non-prized or unpaid prized subscriber. But that is not the sole criterion. It may be that the transfer impugned was made by the foreman while he was in solvent circumstances. Still, if such transfer defeats or delays a non-prized or unpaid prized subscriber, he can avoid the transfer under S. 28 of the Chitties Act. It is also clear from sub-s. (2) of the Section, that when the transfer is disputed the burden is on the transferee to prove that it does not defeat or delay the non-prized or unpaid prized subscriber. We do not think that the decisions reported in 22 T.L.J. 674, 22 T.L.J. 513 and 28 T.L.J. 771 relied on by the learned judge go counter to the above view that we have taken of S. 28 of the Chitties Act. The respondents have not adduced any evidence in this case to show that the assignment does not defeat or delay the appellant. On the other hand the facts and circumstances disclosed clearly establish that the assignment of the decree in favour of the father of the respondents has the effect of defeating and delaying the appellant who has obtained Ext.1 decree as early as 15.6.11112 for the chitty money due to him. In spite of several steps in execution he has not yet been able to realise the decree amount due to him. The speed with which the foreman created evidence of assignment in favour of the father of the respondents by filing a joint execution application along with him added to the fact that the assignment was without consideration indicates clearly the purpose behind the assignment. The speed with which the foreman created evidence of assignment in favour of the father of the respondents by filing a joint execution application along with him added to the fact that the assignment was without consideration indicates clearly the purpose behind the assignment. We have therefore no doubt that the assignment in question is voidable under S. 28 of the Chitties Act (Act II of 1094) as contended for by the appellant. 3. It is not necessary for the appellant to have recourse to separate suit to avoid the transfer. He can avoid it by effecting the attachment on the decree as he has done and if the transfer is found to be voidable on the grounds mentioned in S. 28 he is entitled to execute the decree in pursuance of the attachment and recover the amount due to him. 4. Its follows that the order appealed against cannot stand. Therefore in reversal of the order of the learned judge we allow this appeal with costs throughout and restore the order of the learned Munsiff. Allowed.